HDTV May Mean Cost Increases to DirecTV, Customers, Hartenstein Says
The future may hold price increases for DirecTV customers, DirecTV Group Vice Chmn. Eddy Hartenstein told investors Tues., although no decisions have been made. Speaking at a Merrill Lynch conference, Hartenstein said increases would be due in part to increased HD programming, but “we'll have to wait and see how negotiations go with content providers.”
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DirecTV recently announced plans to expand its local and national HDTV feeds between 2005 and 2007, anticipating an increase in the number of HD channels available, Hartenstein said. The question is whether programmers will differentiate between different HD feeds and “what costs will they pass on to us, or will everything standard today become [HD] 5 years from now and then where do costs go?” he said.
Meanwhile, DirecTV’s partnerships with telcos are being used to “expand our ability to differentiate ourselves as a video service,” Hartenstein said. Because of that focus, he said DirecTV is “not too worried” about the long-term plans of the telcos to offer video services in the future: “We think to pair up the way we have [is] offering the best of both worlds.”
In response to a question about DirecTV relationships with NDS and TiVo, Hartenstein said the company wouldn’t emphasize either company in forthcoming DVRs. NDS announced in Aug. it would provide DirecTV with its XTV PVR starting in 2005, while TiVo’s relationship will continue through 2007. “We've been marketing it as a DirecTV DVR, [which] says something at the same time it doesn’t. [While] we're looking at a variety of DVRs, a DirecTV branded DVR is what you're going to get.” He said the company’s established TiVo relationship allows DirecTV to use DVRs from others, but a DirecTV branded product is “the easiest way to explain it and leave flexibility to bring the lowest cost possible DVR with the most basic functionality with the broadest base.”
Hartenstein also said a final decision for the Latin American market hasn’t been made, but an announcement is likely to be made soon. DirecTV Latin America (DTVLA) recently emerged from bankruptcy. Past speculation has suggested that News Corp.’s Rupert Murdoch is considering a combination of News Corp.’s Sky Latin America and DTVLA, although News Corp. has declined to comment. Hartenstein said he wouldn’t preannounce a deal, but said the resulting entity could be “structured in a way that we can… have a common set-top box, common operating systems, [and] further push through cost savings and synergies across the Americas platform.”